ECJ ruling on refills
In its decision of 14 July 2011 the ECJ ruled in the Viking Gas v. Kosan Gas case on a trademark infringement claim relating to gas bottles in which gas was supplied and refilled by Viking Gas.
However, the bottles were marked by Kosan Gas’ (licensed) trademarks. Also the shape of the bottles are protected by a three-dimensional mark. Viking Gas refills the Kosan Gas bottles, attaching adhesive labels to the gas bottles bearing its name and the filling station number together with a further adhesive label providing inter alia information as required by law on the filling station and the contents of the bottles. The Kosan Gas trademarks remain untouched.
Kosan Gas claims trademark infringement on grounds of violation of articles 5 and 7 of the Trademark Directive 89/104/EEC because of the refilling of the bottles. According to the ECJ, these provisions
‘must be interpreted as meaning that the holder of an exclusive licence (…) may not prevent those bottles, after consumers have purchased them and consumed the gas initially contained in them, from being exchanged by a third party, on payment, for composite bottles filled with gas which does not come from the holder of that licence, unless that holder is able to rely on a proper reason for the purposes of article 7(2) of Directive 89/104.’
In short, Viking Gas cannot be prevented from offering its refill service. Why? Several factors are relevant here, such as: the composite bottles are intended for re-use a number of times and have an independent economic value. The consumer pays at first purchases for such a bottle filled with gas from one of Kosan Gas’ dealers -he pays not only for that gas, but also for the composite bottle, the price of which is higher than that of standard steel gas canisters. Also the specific technical characteristics of the bottles and the price of the gas which they contain should be taken into account. These factors attribute to the conclusion that the sale of composite bottles allows the trademark holder (or licensee) to realize the economic value of the marks. The Court has already held that a sale which allows the realization of the economic value of a mark relating to those bottles exhausts the exclusive trademark rights conferred by the Trademark Directive.
So, the sale of the composite bottle exhausts the trademark rights, including the right to exchange it or have it refilled, once the original gas has been consumed, by an undertaking of the consumers’ choice.
Dutch Heineken refill case
In a comparable recent case in the Netherlands, Heineken started trademark infringement proceedings because Olm refilled Heineken casks with (cheaper) Olm beer, and sold those casks to, amongst others, Heineken café’s. The presiding judge of the District Court of Amsterdam ruled that Olm infringes the Heineken trademarks with such refills:
‘In refilling Heineken casks, in which the Heineken trademark is punched, with Olmbeer, Olm infringes the Heineken trademarks, regardless of how Olm sells the beer afterwards (as Olmbeer or as it being Heinekenbeer).’ (free translation).
Contrary to the ECJ Viking Gas ruling the court in Amsterdam did not assume exhaustion of trademark rights. The reason for this was that the ownership of the Heineken casks wasn’t transferred to its buyers.
Both judgments show that a relevant factor in refill cases seems to be whether or not the ownership of the refilled trademarked container product is transferred. If not, the assumption is – at least in the Netherlands – that the economic value of the container product is not yet commercialized. If that is the case, selling refilled container products is a trademark infringement, if the container product does not originate from the same company that refills the containers and the trademark of the owner is still on the container.
The ECJ ruling lets the door open for an alternative trademark action, even if the ownership is transferred. Refilling is actionable when there is serious damages to the reputation of the trademark. Also, there is an obligation for the refiller that ‘[t]he labelling of the composite bottles and the circumstances in which they are exchanged must not lead the average consumer who is reasonably well informed and reasonably observant and circumspect to consider that there is a connection between the two undertakings at issue in the main proceedings or that the gas used to refill those bottles comes from Kosan Gas.’
In order to assess if the refiller violates this obligation, the practices of the relevant sector have to be taken into account (in the case of gas bottles: whether consumers are accustomed to the gas bottles being filled by other gas dealers).
According to the ECJ, it appears to be reasonable to assume that a consumer, who goes directly to Viking Gas either to exchange his empty gas bottle for a full bottle or to have his own bottle refilled, is more readily in a position to be aware that there is no connection between Viking Gas and Kosan Gas. Also, a relevant factor is whether by labeling the gas bottles the condition of the bottles is altered by masking their origin. If this is the case, refilling is actionable.
The ECJ ruling shows that for the trademark owners, in the gas bottle sector, it will be quite difficult to prove that the refilling of gas bottles is actionable. However, if the ownership of the refilled trademarked products is not transferred, the outcome might be different.
To our opinion, there’s likely to be a difference between the sector of gas bottles and beer casks. Buyers and consumers of beer probably expect Heineken beer casks to be filled with Heineken beer. Trademark infringement should therefore be easier to prove in this sector.